How Parents Can Teach Their Kids Financial Literacy While Learning It On Their Own

Financial literacy isn’t just about learning how to make money. If you’re wondering how to save it and make it grow, there’s no easier way than to learn alongside your kids.

Across the country, October is National Financial Planning Month, a time when you might want to review your retirement statement or rethink your investments for the new year. The month also serves as a good reminder to teach those you love a thing or two about the basics of money. Whether it’s explaining the value of a dollar or the delayed gratification of a beloved toy, you can easily explain to children where money comes from, how best to store it, and how we can use well-earned money to shape the world we live in. in.

Too often, financial literacy is something we expect from our children after they get a job. But by then, well, it’s already too late. So, at what age are you too young to talk to children about money and finances? Experts say there is no such thing as too soon. And while you may think you already know everything there is to know about money, the truth is that the job and housing market keeps changing, and so does wealth building. Chances are, teaching your kids the basics of credit, debt, saving, and investing will also help you learn a thing or two about how the economy has changed over the years. last years. There’s no better time than the present to tackle any hesitations you may have about teaching your children what they need to know to become financially independent.


What is Financial Literacy?

Financial Literacy sounds flashy, but its meaning is quite simple. Simply put, it’s the know-how to budget, track expenses, save, plan for retirement, and manage debt. These basic financial skills are foundational concepts that later help young adults balance their needs against their wants, and help adults choose between risky investments and well-managed debt. Without these fundamentals early in life, children can fall into habits that equate money (or gifts) with happiness, love, and fun. In the long run, some of these patterns are hard to break. So it’s best not to rely on schools or their peers to teach your children the meaning of money. From toddlers to teenagers, your kids will eventually hear about everything from allowances to Zelle, so build a healthy relationship with them by talking directly about money and wealth building.

Here are some tips on how to teach kids about money while you’re still learning about it yourself.

Start those conversations young

Money saving expert Andrea Woroch says it’s never too early to start talking about finances, and it can be as simple as taking them shopping or doing daily chores. “Your kids learn from your habits and how you spend or save and even talk about money will shape how your kids handle money in the future, even if you don’t realize it,” says Woroch. It can be as simple as using positive language when talking about money. Try saying “we have to save up for this” or “this is not how we choose to spend our money” instead of “we can’t afford it” to set a healthy financial goal for your impressionable child.

Sophie Ramirezsenior advisor at Tender, offers to create a backup array. “This visual shows their progress towards a financial goal and teaches your kids how much things cost and encourages them to save.” Even for young learners, this visual tool can help them learn to add and subtract.


Be a role model, not a mirror

Most people think the easiest way to teach their kids about money is to let them watch what they’re doing, from the grocery aisle to shopping online. Good try! You might be surprised to see your own vices reflected after your children imitate your bad habits. Instead, train yourself to be a role model of what you hope they (and you) would face when it comes to money issues or opportunities.

Woroch says including kids in budgeting for an upcoming event or a big purchase can be a great learning experience. When you have to make a budget cut, think before you grumble. Watch how you talk about sacrificing short-term pleasure for long-term gain. Model your best behavior, and in doing so, you might convince both your child and yourself that old habits are worth breaking.

In fact, changing habits in front of your children adds a strong sense of responsibility, which can help you stick to your new habits while instilling good habits in them earlier in life.

Play more than you preach

Rather than just teaching money matters through weekly allowances or on actual shopping trips, incorporate financial literacy into family game night or screen time. Ramirez recommends Monopoly Junior or Monopoly, Pay Day, and The games of life, which teach long-term monetary strategies. These great educational board games can help your kids play with money and try the consequences of risk taking.

While playing with play money, parents would be wise to start conversations about why each child, different from each other, made their own choices. This will help parents gain trust and become a confidant when there are real money choices to be made. Parents who listen more than they talk can tailor their message to each child’s needs as they grow. Similarly, Ramirez recommends Financial football and savings party for online gamers.


Make sure the kids have a bank account

“Help your children find their first job and open a bank account. Whether it’s watching your neighbor’s cat or babysitting, now is a great time to open your first checking account and strive to deposit a certain amount each month,” says Ramirez. For some people, this is easier said than done. More … than 6% of US households (over 14 million people) are unbanked, which means that they do not use a bank for their main financial needs. Many neighborhoods do not have a bank, but using local check cashing or currency exchange services incurs high transaction fees. Later, it becomes difficult to build up a solid credit history, necessary to access a bank loan for all major expenses, including a car, a house and even education. So it’s crucial to go the extra mile to help your child find the right bank to support their future.

Many online banks are offering favorable rates and new physical banks are appearing in expected areas. Research together to compare banks and credit unions. Analyze fees, interest rates and terms of service. These early banking decisions are likely to stay with your children for many years to come, so never underestimate the value of taking the time to review them side by side. You may also discover that your own bank does not offer the best deal and may also want to make a change.


Don’t forget to talk about debt

For high school students, now is a great time to start teaching them responsible credit card use. “Add them as a secondary user,” suggests Woroch, and “take the time to show your child the credit card statement, explaining how you need to pay it off by a certain date, and steps to manage it before the balance does not exceed control.” Also, don’t forget to discuss the annual fees and protections that credit cards offer versus debit cards. These benefits may (or may not) be worth it in the future, but the identity theft protection are well worth a discussion.

For college kids, it’s easy to teach them a valuable lesson about debt. In the weeks leading up to the gift-giving holiday, children tend to start pressuring parents to buy now against the promise of money to come in the form of gifts and increased allowances. Try to explain to them the cost of debt by charging interest and explain to them how it works. Ask them to pay a few extra dollars when it’s time to settle their debt and set appropriate and enforceable repercussions in case they can’t repay you.


Talk about the economy and the news

“It’s important to keep your child up to date with what’s going on in the economy,” adds Woroch. “You can explain what you’re doing now to adjust for inflation, which is like balancing a budget.” Understanding the basics of how current events and the global economy impact personal finances will help them in the long run.

Make gratitude and generosity part of the conversation

If your family is doing well despite the economic downturn, you can teach your children to appreciate what they have and encourage them to help others in need. Ramirez suggests that parents “make kids more aware of how money can benefit others, not just themselves, by encouraging them to raise money for a cause. It’s also a great way to develop their social awareness.



Geraldine L. Melton